Teenagers: Silent Victims of Minimum Wage Laws

The New York Times has a long article today in its Business Section about the dismal job market for teenagers this summer, here are some excerpts from “Job Outlook for Teenagers Worsens“:

“This year is shaping up to be even worse than last for the millions of high school and college students looking for summer jobs. With so many people competing for so few jobs, unemployed youth “are the silent victims of the economy,” said Adele McKeon, a career specialist with the Boston Private Industry Council who counsels students on matters like workplace etiquette, professionalism and résumé writing.

Getting the first job “is an accomplishment, and it’s independence, Ms. McKeon said. If you don’t have it, where are you going to learn that stuff?”

The unemployment rate for the 16-to-24 age group reached a record 19.6 percent in April, double the national average. For those job seekers, said Heidi Shierholz, an economist at the Economic Policy Institute, “This is the worst year, definitely since the early ’80s recession and very likely since the Great Depression.”

MP: Not once in the 1,300 word article does the writer discuss the devastating effects on teenage employment of the 41% increase in the minimum wage from $5.15 per hour in early 2007 to $7.25 by the summer of 2009. Thanks to Jeff at the Added-Value Blog for pointing this out. Here’s my re-write:

This year is shaping up to be even worse than last for the millions of high school and college students looking for summer jobs. With so many people competing for so few jobs, unemployed youth “are the silent victims of the economyminimum wage legislation” said Adele McKeon, a career specialist with the Boston Private Industry Council who counsels students on matters like workplace etiquette, professionalism and résumé writing.Mark Perry, professor of economics at the Flint campus of the University of Michigan.

Getting that first job “is an accomplishment, and it’s independence. If you don’t have it, where are you going to learn that stuff?” said a career specialist. According to Perry, “With a 41% increase in the minimum wage between 2007 and 2009 from $5.15 to $7.25 per hour, the chances of getting that first job, along with valuable experience, on-the-job training and independence will now be more difficult than ever before.

Especially during an economic downturn, unskilled workers have a potentially powerful weapon and advantage that can give them a competitive edge over skilled workers in a weak labor market – low wages. But between 2007 and 2009, politicians took away the competitive advantage of unskilled workers at the time they needed it most, by boosting the minimum wage for unskilled workers by 41%, and essentially pricing them right out of the worst economy and labor market since the early 1980s.”

The unemployment rate for the 16-to-19 age group reached 25.4 percent in April, 15.5 points higher than the national average of 9.9% (see chart above). For those job seekers, said Heidi Shierholz, an economist at the Economic Policy Institute, “This is the worst year, definitely since the early ’80s recession and very likely since the Great Depression, in large part due to the increase in the minimum wage increases in 2007 (13.6%), 2008 (12%), and 2009 (10.7%).”

As researchers at Northeastern University, who issued a report in April on youth unemployment, put it, “The summer job outlook does not appear to be very bright in the absence of a massive new summer jobs intervention, or a repeal of the minimum wage legislation.”

The poor numbers this year are not solely a symptom of the continued weak economy, but have been made far worse by the recent hikes in the minimum wage. For generations, government data shows, at least half of all teenagers were in the labor force in June, July and August. Starting this decade, though, the number of employed teenagers began to drop, and by 2009, less than a third of teenagers had jobs. This year, the number could fall below 30 percent, and teenagers have the minimum wage to thank for the worst job prospects in a generation for their age group.

The forecast for this summer is so dire that high school students took to the streets this year in Washington, Boston and New York to push lawmakers to come up with money for summer youth jobs programs as Congress did last year, allocating $1.2 billion for a program for low-income youths.repeal the minimum wage law that students refer to as the “teenage job killer.”

Update from Don Boudreaux: “Suppose Uncle Sam orders you (The New York Times) to raise by 41 percent the price you charge for subscriptions to your newspaper. Would you be surprised to find a subsequent fall in the number of subscribers? If you assigned a reporter to investigate the reasons for this decline in subscriptions, would you be impressed if that reporter files a story offering several possible explanations for the fall in subscriptions without, however, once mentioning the mandated 41 percent price hike?

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.